Pakistan on Wednesday signed $1 billion financing for a five-year multi-tranche facility with the Asian Development Bank (ADB).

“The Ministry of Finance has signed a syndicated term finance facility of $1,000 million partially guaranteed by a Policy-Based Guarantee of the ADB Programme ‘Improved Resource Mobilisation & Utilisation Reform’,” according to a press release.

The press release said that the Dubai Islamic Bank (DIB) acted as the Sole Islamic Global Coordinator while DIB and Standard Chartered Bank were the Mandated Lead Arrangers and Bookrunners.

Other financiers include Abu Dhabi Islamic Bank as the Mandated Lead Arranger and Sharjah Islamic Bank, Ajman Bank and HBL as Arrangers, it added.

“The facility is a landmark transaction for the Government of Pakistan that demonstrates strong support from leading financiers in the region. This is a five-year multi-tranche facility including both Islamic and conventional tranches,” it said.

The finance ministry said that the Islamic facility was structured to be fully compliant with AAOIFI standards, and accounts for 89 per cent of the total financing amount, and the remaining 11pc was from conventional financing.

It added, “The transaction was also the first facility supported by ADB’s Policy-Based Guarantee linked to policy reform measures undertaken by an ADB Member Country, i.e Pakistan.”

“The ADB programme is designed to support Pakistan to build long-term fiscal resilience and stability and has supported Pakistan’s re-entry into international commercial markets, with significant interest from Middle Eastern Banks,” the press release read.

The ministry also said that the government successfully entered the Middle Eastern financial market after nearly two and a half years, the success of which indicates “the renewed trust of the market in the fiscal stability and the overall improvement in the macroeconomic indicators of Pakistan”.

“This transaction also marks the beginning of a new partnership of the Government of Pakistan with Middle Eastern banks,” it added.

Meanwhile, Khurram Schehzad, adviser to the finance minister, posted the announcement on X. He said, “Pakistan secures $1bn landmark financing with ADB-backed guarantee and strong Middle Eastern banks’ support.”

Earlier this month, the Philippines-based lender approved $800 million programme to strengthen fiscal sustainability and improve public financial management in Pakistan.

ADB said in a statement that subprogramme 2 of the “Improved Resource Mobilisation and Utilisation Reform Programme” includes a policy-based loan of $300m, and ADB’s “first ever policy-based guarantee” of up to $500m, which is expected to mobilise financing of up to $1 billion from commercial banks.